Tax planning help

Tax planning help

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Can I run this past some of the more experienced practitioners?  I've only just started and want to make sure Im doing the right thing by my client :-)

I'm meeting a client tomorrow wo has made a great profit in 2011 (£75k, 2 directors)

Its a ltd company and the directors have drawn a small salary £589 p mth + paid a dividend of £20k (gross)

They want advice on what to do with the remaining profits to minimise their tax liability.

Im thinking:  pension contributions, additional dividend to take them to £35k (salary + div), rent charged from company to director for use of home, any family member doing a role who could take a salary....

Any more ideas, what else should I be looking at? 

Sheffield accountant

Replies (4)

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Teignmouth
By Paul Scholes
19th Sep 2011 11:57

All of those as long as....

they haven't reached their year end yet as you would not be able to back date pension contributions or dividends and trying to create an employment after the event is not advisable.  Even the rental agreement should really be agreed in advance in that it's unusual for a landlord to let a tenant have the keys without something in writing.

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By taxhound
19th Sep 2011 12:25

rent v dividend

Don't forget rent is taxable to so will use up the basic rate allowance too.  If they have no expenses to set against the rent it is tax neutral if you pay rent or just take a bigger dividend instead.

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By sheffieldaccountant
19th Sep 2011 13:15

Thanks. The year end is soon

Thanks. The year end is soon though so not a lot of time to deliberate!

 

Any other things I should consider?

 

 

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Teignmouth
By Paul Scholes
19th Sep 2011 13:50

Bits

Anthing else, in terms of company tax, tends to flow from the particular business, for example I had a client who paid staff bonuses based on year end profits and so provided for these.  Also, as a general, obvious, point make sure year end cut off in terms of wip/income recognition etc is OK.

With regard to pension, watch out for the pros & cons of personal v company contributions, ie that the company makes gross contributions whereas personal contributions are made net and grossed up.

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